Ligand Provides Highlights from Today’s Analyst Day Event

SAN DIEGO--(BUSINESS WIRE)--At an Analyst Day event held today in New York City, Ligand
Pharmaceuticals Incorporated (NASDAQ:LGND) reviewed the recent
progress of its business, its revenue growth opportunities and its
portfolio of partnered assets and unpartnered development programs.
Management also discussed the OmniAb and Captisol discovery and
formulation technologies as well as its financial outlook for 2017.

Highlights of presentations by Ligand’s senior management include the
following:

Business model and growth drivers:

Ligand has more than 155 fully-funded programs in partnership with
more than 92 different pharmaceutical and biotechnology companies, and
is eligible to receive over $2 billion in milestone payments based on
success. 14 products have been approved and are generating commercial
revenue for Ligand today, and the company projects that in 2020 more
than 28 products from its portfolio will be commercialized and
generating revenue for Ligand.

Ligand estimates that in 2017 its partners will spend more than $2
billion on R&D to advance partnered programs, including funding 32
Phase 3 trials and 39 Phase 2 trials.

Global product sales by partners on which Ligand is entitled to
receive royalty payments are projected to be approximately $1.9
billion in 2017. The blended average royalty rate to Ligand during
this period is expected to be close to 4.6% of net sales.

Ligand identified major growth drivers that could occur in 2017
including;

Promacta® sales have continued to grow under Novartis,
surpassing $600 million in annual sales in 2016 for the first time
ever, and pushing into the top of the tiered royalty structure earlier
in the year. The drug is approved to treat idiopathic thrombocytopenia
in over 100 countries, thrombocytopenia induced by Hepatitis C in over
50 countries and aplastic anemia in over 45 countries. 23 clinical
trials are ongoing to potentially expand Promacta indications to
include MDS (Phase 2), chemotherapy-induced thrombocytopenia (Phase 2)
and others.

Kyprolis®, developed and marketed by Amgen, for the
treatment of multiple myeloma, which uses Captisol in its formulation,
has also shown significant growth, with worldwide sales reaching close
to $700 million in 2016. Kyprolis was approved to be marketed in Japan
by Ono Pharmaceutical Co in 2016. Trials are ongoing to further expand
Kyprolis’ label including a Phase 3 trial in combination with Darzalex
which is expected to begin in the second quarter of 2017.

Management provided an update on the Big 6, which now includes the
following programs:

Management also provided an update to the Next 12, which now includes
the following drug types: oncology (6), metabolic disease (2),
cardiovascular (1), inflammation (1) specialty (1) and biosimilar (1).

Additionally, Ligand provided updated metrics to describe the
portfolio as a whole, noting;

33% are in Phase 2 development or later

Captisol programs make up more than a third of the portfolio, with
Selexis programs making up a quarter and current OmniAb programs
making up a fifth

The portfolio is widely diversified across indications but also
has a significant number of oncology programs

GRA is Ligand’s proprietary glucagon receptor antagonist in
development as an oral treatment for type 2 diabetes (T2DM), which
recently completed enrollment of its ongoing Phase 2 trial. At the
Analyst Day event management discussed the growing need for novel
treatments for T2DM and GRA’s positive safety and efficacy profile.
The company expects topline results in September 2017.

Ligand also highlighted the strength of the intellectual property
protecting its portfolio and technologies, with over 700 worldwide
issued patents.

Underlying technologies review:

Management gave an update on the progress of Captisol, highlighting
that since Ligand’s acquisition of CyDex in 2011, over 450 research
and animal use agreements have been executed with potential partners,
and that the number of inbound requests for Captisol samples passed
800 for the first time in 2016. Captisol has patent-protection through
2033 in major markets.

Roland Buelow, Ph.D., VP of Antibody Technologies and founder of
Ligand-acquired OMT Technologies and inventor of the OmniAb technology
platform, discussed the growing number of antibody therapeutics in
development and the novel approach of the OmniAb platform. To date,
OmniAb partners have initiated over 300 discovery projects with the
technology, and Ligand estimates that approximately 30
OmniAb-discovered antibodies will enter the clinic in the next five
years. By 2027, Ligand estimates that over 50 Phase 1 trials will be
completed or in-process, with multiple Phase 2 and Phase 3 trials
ongoing, three or more OmniAb therapeutics on the market and
cumulative revenue received at that time of over $300 million.

Ligand also reiterated and gave additional detail regarding recent
core revenue and core adjusted EPS guidance for 2017 as follows:

Core royalties are projected to be $87 million, taken from a range
of $80 million to $95 million that is calculated based on applying
contractual royalty rates to sell-side analyst estimates.

Core materials sales are projected to be $23 million, which shows
continued growth over prior years when normalizing historical
sales to remove historical lumpy ordering patterns of a
significant customer.

Core milestone and license revenues are projected to be $20
million, with potential upside of an additional $30 million of
milestones including; licensing/financing, NDA-related, trial
start and other types of milestones.

Based on core revenue of $130 million, adjusted EPS is expected to
be $2.70, although this amount could increase based on potential
receipt of upside milestones beyond $20 million.

Management also reiterated its projected cash operating expense
structure of $28 million to $30 million, which implies 2017 EBITDA of
$96 million, compared to $74 million in 2016 or a 30% increase.

Ligand reiterated that the 2017 tax rate for adjusted EPS is expected
to be between 36% and 39%, although the actual cash tax rate is
expected to be less than 1%.

Management also provided a general outlook through 2020, which
included the expectation that:

Royalties grow in line with consensus sell-side research

Milestones continue at a core level of $20 million - $30 million,
with potential upside

Materials grow at a 5% - 10% CAGR

Cash operating expense expected to be relatively flat with only
modest annual increases

Adjusted EPS tax rate continues to be between 36% and 39%, while
actual cash tax rate is less than 1% through 2020

A webcast of the Analyst Day presentations can be accessed at www.ligand.com
for the next 90 days.

Adjusted Financial Measures

The company reports adjusted results for diluted net income per share
and net income, in addition to, and not as a substitute for, or superior
to, financial measures calculated in accordance with GAAP. The company’s
financial measures under GAAP include stock-based compensation expense,
amortization of debt-related costs, amortization related to
acquisitions, changes in contingent liabilities, net losses of Viking
Therapeutics, mark-to-market adjustment for amounts owed to licensors,
fair value adjustments to Viking Therapeutics convertible note
receivable and warrants, unissued shares relating to the Senior
Convertible Note, unissued shares relating to the anti-dilutive effect
of fourth quarter and fiscal year 2016 GAAP net loss and adjustments for
discontinued operations, and others that are listed in the itemized
reconciliations between GAAP and adjusted financial measures included in
this press release. However, other than with respect to total revenue,
the Company only provides guidance on an adjusted basis and does not
provide reconciliations of such forward-looking adjusted measures to
GAAP due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliation, including
adjustments that could be made for changes in contingent liabilities,
net losses of Viking Therapeutics, mark-to-market adjustments for
amounts owed to licensors and fair value adjustments to Viking
Therapeutics convertible note receivable. Management has excluded the
effects of these items in its adjusted measures to assist investors in
analyzing and assessing the Company’s past and future core operating
performance. Additionally, adjusted diluted earnings per share is a key
component of the financial metrics utilized by the company’s board of
directors to measure, in part, management’s performance and determine
significant elements of management’s compensation.

About Ligand Pharmaceuticals

Ligand is a biopharmaceutical company focused on developing or acquiring
technologies that help pharmaceutical companies discover and develop
medicines. Our business model creates value for stockholders by
providing a diversified portfolio of biotech and pharmaceutical product
revenue streams that are supported by an efficient and low corporate
cost structure. Our goal is to offer investors an opportunity to
participate in the promise of the biotech industry in a profitable,
diversified and lower-risk business than a typical biotech company. Our
business model is based on doing what we do best: drug discovery,
early-stage drug development, product reformulation and partnering. We
partner with other pharmaceutical companies to leverage what they do
best (late-stage development, regulatory management and
commercialization) to ultimately generate our revenue. Ligand’s Captisol®
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility and
stability of drugs. OmniAb® is a patent-protected transgenic
animal platform used in the discovery of fully human mono-and bispecific
therapeutic antibodies. Ligand has established multiple alliances,
licenses and other business relationships with the world's leading
pharmaceutical companies including Novartis, Amgen, Merck, Pfizer,
Celgene, Gilead, Janssen, Baxter International and Eli Lilly.

Follow Ligand on Twitter @Ligand_LGND.

Forward-Looking Statements

This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand's judgment as of the
date of this release. Words such as “plans,” “believes,” “expects,”
“anticipates,” and “will,” and similar expressions, are intended to
identify forward-looking statements. These forward-looking statements
include, without limitation, statements regarding: growth in the number
of products in Ligand’s portfolio, the research and development
expenditures of Ligand’s partners, the average royalty rate expected
based on sales by Ligand’s partners, Ligand’s future revenues and other
projected financial measures, the timing and results of Ligand’s
clinical trials and clinical trials to be conducted by Ligand’s
partners, Ligand’s expected tax rate, Ligand’s projected operational and
financial results, and guidance regarding 2017 financial results. Actual
events or results may differ from Ligand's expectations. For example,
Ligand may not receive expected revenue from material sales of Captisol,
expected royalties on partnered products and research and development
milestone payments. Ligand and its partners may not be able to timely or
successfully advance any product(s) in its internal or partnered
pipeline. In addition, there can be no assurance that Ligand will
achieve its guidance for 2017 or any portion thereof or beyond, that
Ligand's 2017 revenues will be at the levels or be broken down as
currently anticipated, that Ligand will be able to create future
revenues and cash flows by developing innovative therapeutics, that
results of any clinical study will be timely, favorable or confirmed by
later studies, that products under development by Ligand or its partners
will receive regulatory approval, that there will be a market for the
product(s) if successfully developed and approved, or that Ligand's
partners will not terminate any of its agreements or development or
commercialization of any of its products. Further, Ligand may not
generate expected revenues under its existing license agreements and may
experience significant costs as the result of potential delays under its
supply agreements. Also, Ligand and its partners may experience delays
in the commencement, enrollment, completion or analysis of clinical
testing for its product candidates, or significant issues regarding the
adequacy of its clinical trial designs or the execution of its clinical
trials, which could result in increased costs and delays, or limit
Ligand's ability to obtain regulatory approval. Further, unexpected
adverse side effects or inadequate therapeutic efficacy of Ligand's
product(s) could delay or prevent regulatory approval or
commercialization. In addition, Ligand may not be able to successfully
implement its strategic growth plan and continue the development of its
proprietary programs. The failure to meet expectations with respect to
any of the foregoing matters may reduce Ligand's stock price. Additional
information concerning these and other risk factors affecting Ligand can
be found in prior press releases available at www.ligand.com
as well as in Ligand's public periodic filings with the Securities and
Exchange Commission available at www.sec.gov.
Ligand disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release. This caution
is made under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.